Friday, Jul 20, 2007
MARC has reaffirmed IJM Plantations Berhad’s (IJMP) RM150 Million Al-Bai Bithaman Ajil Islamic Debt Securities (ABBA) rating at A+ID with stable outlook. The reaffirmation reflects consistent operating performance, well managed plantations and favourable capital structure. These strengths are moderated by IJMP’s exposure to cyclical palm oil prices.
IJMP is principally involved in the cultivation and management of palm oil estates. Currently, IJMP’s landbank totalling 29,781 hectares (ha) primarily concentrated in the Labuk-Sugut and Sandakan regions of Sabah, out of which 25,421 ha have been planted. Matured and immatured plantings occupy around 88.7% and 11.3% respectively based on its present plantation profile. For the fiscal year ended 31 March 2007 (FY2007), IJMP recorded an average crop yield of 22.4 tonnes/ha (FY2006: 22.2 tonnes/ha), boosted by its Sandakan region estates average yield of 27.1 tonnes/ha, but moderated by its young plantings in the Sugut region estates which recorded an average yield of 19.4 tonnes/ha. IJMP’s average FFB yield performance was better than the industry’s average yield of 19.6 tonnes/ha but slightly below Sabah’s average of 23.1 tonnes/ha. Despite its strategically located palm oil mills and well managed estates, IJMP’s average oil extraction rate (OER) decreased slightly to 21.5% compared to 22.4% in the previous year, as a result of inclement weather during 4Q2006 which affected transporting of the FFB to its mills.
In FY2007, IJMP’s unaudited profit before tax increased by 8.3% to RM56.5 million (FY2006: RM52.1 million) on the back of higher revenue of RM271.6 million (FY2006: RM244.6 million). Sales of CPO accounted for 80% (i.e. RM217.3 million) of IJMP’s total revenue in FY2007, mainly attributable to higher average CPO prices of RM1,511/tonne compared to RM1,373/tonne in FY2006 (or 10% increase y-o-y). IJMP financial performance is anticipated to strengthen in the medium term as a result of higher crop output and CPO prices are likely to hold at the present high levels in the near term in light of the anticipated global tightening of supply over the next 12 months. Historically, IJMP’s debt leverage ratios have been sound, and are currently well below the maximum covenanted level of 0.75 times (FY2007: 0.24 times) imposed under the terms of the issuance. Liquidity position of IJMP appears robust with cash and bank balance of RM53.8 million as at 31 March 2007. Financial flexibility is also deemed strong, supported by its major shareholder, IJM Corporation Berhad, and presently unencumbered assets totalling RM732.1 million. IJM Corporation Berhad currently has ratings of A+/MARC-1 from MARC on its notes issuance programme.
The stable outlook reflects MARC’s expectations that IJMP will maintain strong operating results, sustain healthy cash generation and maintain a conservative balance sheet with low debt levels.
IJMP is principally involved in the cultivation and management of palm oil estates. Currently, IJMP’s landbank totalling 29,781 hectares (ha) primarily concentrated in the Labuk-Sugut and Sandakan regions of Sabah, out of which 25,421 ha have been planted. Matured and immatured plantings occupy around 88.7% and 11.3% respectively based on its present plantation profile. For the fiscal year ended 31 March 2007 (FY2007), IJMP recorded an average crop yield of 22.4 tonnes/ha (FY2006: 22.2 tonnes/ha), boosted by its Sandakan region estates average yield of 27.1 tonnes/ha, but moderated by its young plantings in the Sugut region estates which recorded an average yield of 19.4 tonnes/ha. IJMP’s average FFB yield performance was better than the industry’s average yield of 19.6 tonnes/ha but slightly below Sabah’s average of 23.1 tonnes/ha. Despite its strategically located palm oil mills and well managed estates, IJMP’s average oil extraction rate (OER) decreased slightly to 21.5% compared to 22.4% in the previous year, as a result of inclement weather during 4Q2006 which affected transporting of the FFB to its mills.
In FY2007, IJMP’s unaudited profit before tax increased by 8.3% to RM56.5 million (FY2006: RM52.1 million) on the back of higher revenue of RM271.6 million (FY2006: RM244.6 million). Sales of CPO accounted for 80% (i.e. RM217.3 million) of IJMP’s total revenue in FY2007, mainly attributable to higher average CPO prices of RM1,511/tonne compared to RM1,373/tonne in FY2006 (or 10% increase y-o-y). IJMP financial performance is anticipated to strengthen in the medium term as a result of higher crop output and CPO prices are likely to hold at the present high levels in the near term in light of the anticipated global tightening of supply over the next 12 months. Historically, IJMP’s debt leverage ratios have been sound, and are currently well below the maximum covenanted level of 0.75 times (FY2007: 0.24 times) imposed under the terms of the issuance. Liquidity position of IJMP appears robust with cash and bank balance of RM53.8 million as at 31 March 2007. Financial flexibility is also deemed strong, supported by its major shareholder, IJM Corporation Berhad, and presently unencumbered assets totalling RM732.1 million. IJM Corporation Berhad currently has ratings of A+/MARC-1 from MARC on its notes issuance programme.
The stable outlook reflects MARC’s expectations that IJMP will maintain strong operating results, sustain healthy cash generation and maintain a conservative balance sheet with low debt levels.